Why the Government knew suitable car ferries for Gourock-Dunoon had to be built specially - and how this failure may lead to the break-up of the whole network

The Government knew suitable vessels for Gourock-Dunoon could and should have been commissioned by them and built specially for the route, that these vessels should have been two vehicle-carrying ferries that could not have been expected to be available on the second hand market, and that this commissioning of two new vehicle-carrying ferries would have been fully compliant with European law.

Who says? The government itself and the EC together say, in the form of official documents produced for the Scottish administration or the European Commission, and in the possession of the present Scottish Government.

But as I discuss below, what is about to happen on Gourock-Dunoon has implications, not just for this route, but for the whole Scottish network. The government, whether knowingly or through incompetence, has set in train a series of events that is not just likely to lead to a private monopoly of vehicle-carrying over this strategically important route and (at best) a highly subsidised and inefficient passenger only service between the two town centres, as we shall see it has also risked undermining its whole rationale and argument to the European Commission that the CalMac routes should be kept together as an integrated network and tendered as such.

So first, why is Gourock-Dunoon important and what are the issues here? The case had been made that there was a sound economic case for building these two vehicle-passenger ferries, the case has been made that there was a solid legal case that these vessels could and should have been built, and we can now say that the government and its predecessors knew that there was an unassailable case on technical grounds that these vessels would have to be built specially for the route since the characteristics of the Gourock-Dunoon route meant that they could not be expected to be provided by the second-hand market.

I have dealt with the economic and legal aspects at length (but give appropriate links and reminders to this below). I am just piecing together last bits of evidence (on the technical grounds issue) about what happened in Gourock-Dunoon. Of course much took place behind closed doors and we may never find out the full truth. But there is enough out there in terms of published information, Freedom of Information (FoI) requests and statements by key players to give us as fairly full picture, much of which I have reported on this website.

The story below is a bit involved but worth following in detail because, as I note, it is not just the future of Gourock-Dunnon that is at stake, it is the future of the entire CalMac network.

A few days before the Gourock-Dunoon tender is settled, there is one last element that can be added to help make sense (though I am not sure that is quite the right word) of the shambles that is Gourock-Dunoon. We know that official advice from the government has been that "suitable" vehicle-passenger vessels are available on the second-hand market for Gourock-Dunoon (a claim already disproved thanks to FoI). See here, and here and here

However, evidence in the public domain shows that detailed arguments and evidence had been previously produced that suitable vessels could not be expected to be provided on the open market, and instead the vehicle-carrying vessels could and should be built specially by the government for Gourock-Dunoon.

Who gave this advice? It was actually official advice within government and to ministers, but kept secret at the time the decision was made public in 2003 that Gourock-Dunoon would be tendered separately from the main CalMac tender with bidders expected to bring their own vessels for the route.

Before I get into this, I feel I have to use a new term. I do so with reluctance, in my career as academic I have found there are often too many words already, with different words for the same thing (like the Commission using "compensation" where we say "subsidy").

But the case of the advice given by officials (past and present) responsible for ferries (including Gourock-Dunoon) in the Scottish Executive / Scottish Government's transport department at Victoria Quay in Edinburgh, words fail me. Or at least there is no one word that captures their performance as documented in my recent blogs.

In my Petitions blog I described how they have given advice that could be described as not competent down the years, with very serious consequences. I did not even have to deal with Gourock-Dunoon to any great extent there to demonstrate my point.

In my blog about the realities of ferries I pointed out why the Government's own official report justified the economics of building two new vehicle-passenger ferries for Gourock-Dunoon, yet was unjustifiably ignored and brushed aside by Victoria Quay in their advice to ministers.

In my Parcel of Rogues blog I pointed out the systemic and sustained efforts by Government to represent things that were simply not true, and they would have known were not true, in relation to Gourock-Dunoon. They would have got away with these "things that were not true" had it not been for Freedom of Information.

And finally there is my blog about the legal "thing that was not true", the claim that they could not build the new vessels needed for Gourock-Dunoon because European law forbade it.

So what we have is a litany of advice that is evidentially not competent and/or things that are demonstrably untrue emanating out of Victoria Quay and into the mouths of successive ministers down the years. As I said there is no one word for this but let's try a phrase. Lets call it "Demonstrably Untrue and/or Not Competent Stuff" or DUNCS for short

It is a clunky phrase and DUNCS as an acronym is a bit makeshift, but it is fit for purpose - unlike the Government's dysfunctional transport department at Victoria Quay. So here is one last piece of the DUNCS jigsaw in the case of Gourock-Dunoon. It stems from the answer I received from the European Commission confirming (as I had argued) that there was no EC law preventing the Government from building new vessels for Gourock-Dunoon had they wished.

But there was one sentence in the reply from the Commission which said; "In addition, bidders should also have the possibility to bring their own vessels instead".

Now it was one thing for the Government to state this (it was what they were doing with the tender after all), but quite another for the Commission. Why? Because the Commission was giving advice on what they saw as relevant to the application of the law, and that sentence suggested that while EC law and guidelines here did not prevent the government building two new vessels for Gourock-Dunoon, the Commission was also saying that Government could not require bidders to use these vessels and operators could use their own vessels if they wished. This seemed consistent with what the Executive had announced in January 2003: "we have concluded that it is possible to tender Gourock-Dunoon … in a way that gives operators the choice of whether to provide a passenger-only or a combined passenger and vehicle service. To do this, we will tender Gourock-Dunoon separately from the rest of the network".

What "choice" really meant here was; "bring your own, we won't build what is needed".

But as I noted in my blog "The current tender documents (and the Commission) say that any operator is free to bring its own boats, but as we have seen and confirmed for years, there is not even one suitable, modern, 12-knot, 40-car bow-and-stern loading ferry on the second-hand market, let alone the two that would be needed to operate the route and run a frequent service. You have to build them specially - as is done for every other CalMac route".

So in that sense the requirement that operators could use their own vessels if they wished was irrelevant, there are and were no suitable vessels available. If the vessels needed had been built after 2007 as the incoming government had promised and then offered for tender, they would have been adopted. There was and will be no alternative, efficient low subsidy alternatives available, instead the route faces getting at best high subsidy, inefficient and totally inappropriate foot passenger only alternatives.

However while all that is true, it is no real stretch of the imagination to see what officials in Victoria Quay would have told the incoming transport minister in 2007: "you want to build two vehicle-passenger ferries for Gourock-Dunoon ministers? That's a courageous decision. You know that it has been policy since 2003 when it was decided to tender Gourock-Dunnon separately that operators could bring their own vessels if they wished? So, minister, imagine what would happen if you built these vessels and the winning bidder wanted to use their own vessels instead? You could have two new vessels lying unused. And in any case, if we built these ships specially for CalMac, the Commission guidelines (also issued in 2003) said that binding any new operator to take over these vessels would in most cases be discriminatory. As we said, a courageous decision minister".

An imagined conversation perhaps but one that is consistent with what has emerged since the years and based on what MSPs have said. All this would, however, have been economical with the reality and the law here.

The Commission guidelines that had been published in December 2003 did state that that binding any new operator to take over any vessels would in most cases be discriminatory, but it went on to say that in relation to a

"vessel with a design so special that it cannot be found or sold on the market or used for another purpose, it will be less restrictive of the freedom to provide services for there to be a requirement that that vessel be taken over than for the service to be awarded to a single shipowner with a contract that would be long enough to allow the full amortisation of a purpose-built vessel. In such cases, the vessel could be leased - under very clear conditions set out in detail in the tender documents - by successive operators from a vessel-owning company set up for that purpose. An obligation for the new service provider to take the ship over directly from its predecessor would also be conceivable … Where Member States' authorities themselves own vessels or have them otherwise at their disposal, these may be placed at the disposal of all potential service operators under the same non-discriminatory terms" see 2003 Commission Guidelines

This was an extremely important clarification by the Commission in late-2003 because it enabled first the Scottish Executive, then the Scottish Government, to make the case that the vessels for the CalMac network had to be built specially for the routes in question and in turn the bidders had to be bound to use these vessels for the routes in question since they were the most appropriate vessels in each case, suitable alternatives would simply not be available in the open market.

This case was duly presented by the Executive to the European Commission to make the argument for the other routes in the main CalMac tender in 2005. The Executive did not make the same arguments for Gourock-Dunoon as it did for the rest of the CalMac network, that vessels would have to be built specially for these routes and that the winning bidder required to use them. But exactly the same arguments had been made persuasively about Gourock-Dunoon as were made about the rest of the CalMac network, by the same officials who were briefing ministers and in turn the European Commission.

In 2001, officials in the Scottish Executive had produced a paper "the Uniqueness of the CalMac Fleet". The paper was prepared as part of the development of the Executive's proposals for the tendering of the Clyde and Hebrides ferry services and fed into the Executive's consideration of the case for tendering the Clyde and Hebrides network as a single unit.

As the published version of the paper says "The paper was not prepared with publication in mind", and indeed its existence was not made public when the decision to tender Gourock-Dunoon separately was made in 2003, along with the requirement that operators bring their own vessels. The existence of the paper was only made public in 2005 when it was put on the web by the Executive, but not published in print form. Even now most people who are interested in these issues are unaware of the existence of the paper, I only found out about it by accident when I was looking for something else on the web.
When the paper was written in 2001, Gourock-Dunoon was still planned to remain part of the main CalMac tender and treated as such. The paper is only five pages long and worth reading in its entirety, but the essence is captured in two paragraphs in the 2005 web version:

21. New vessels … will be designed with the aim of best serving the route on which they will be employed. It is normally expected that when a vessel is ordered for a route she will see out her working life on that route. The overall effect is that there is no ready supply of new tonnage or tonnage under construction, which is uncommitted, from which replacements for the larger Caledonian MacBrayne vessels could be found. The unusual draft and beam restrictions necessary for ships to operate on these routes further restrict the potential availability of second hand vessels from the external market. This restriction also applies to the medium sized vessels in the fleet.

22. The smallest vessels in the Caledonian MacBrayne fleet are not … unique. They are specialised, in that they have particular features of underwater design that match them to the routes they serve. Because there is a relatively restricted market for these vessels it is considered unlikely that craft would be available, either under construction or available new. It should be pointed out that these vessels are not particularly complicated from a technical point of view, and newbuild vessels could be ordered to replace any of them.

The paper concludes that these points hold for all CalMac routes and vessels (including the Gourock-Dunoon route and its vessels) with the possible exception of Ullapool-Stornoway and the MV Isle of Lewis. The paper also mentions additional features such as the side-loading facility for Gourock-Dunoon and Wemyss Bay Rothesay vessels. This special feature would no longer be relevant for Gourock-Dunoon since the new vessels would not be side-loading but would instead have to be designed for the new linkspan and so would have bow and stern ro-ro facilities much like much of the rest of the CalMac fleet. But the rest of the "Uniqueness of the CalMac fleet" document still holds; as it points out, there could be expected to be no ro-ro ferries with draft, beam and capacity specification suitable for Gourock-Dunoon available on the second hand market. The crucial point was that they would have to be built specially.

Given that the vessels needed were not built specially, we are about to see that point that could not be expected to be delivered by the second hand market vindicated in full. Ironically, despite the fact that the government telling DUNCS about there being "suitable" vehicle-passenger vessels available for the Gouorck-Dunoon, tender they must be hoping and praying that two modern 40-car shallow draft 12-knot bow-and-stern loading vessels do not suddenly magic out of the ether and are submitted by one of the tenders for Gourock-Dunoon. Because if "suitable" vehicle-passenger ferries are available for Gourock-Dunoon as the government claimed, then it would raise serious doubts about the claims in their 2001 paper about the "Uniqueness of the Calmac fleet", not just about Gourock-Dunoon but about the rest of the CalMac fleet. If "suitable" vessels could be found by operators bringing their own vessels here, why could this not be done for the rest of the CalMac network? In the Alice in Wonderland world of Victoria Quay they would have those dependent on Gourock-Dunoon believe that such vessels could be found on the open market, but would want the European Commission to believe the opposite and that that suitable vessels for such routes could not be found on the open market.

It is not just those dependent on these ferries who will be watching this with interest, my guess is that the European Commission is also.

Of course, we are about to find out that the "Uniqueness of the CalMac fleet" paper was right all along and that suitable vessels are not available on the open market

So where does that leave us? To summarise, in 2001, Executive officials produced a document that was never intended for publication and indeed which remained unpublished until 2005. The 2001 document made the case that, in common with almost all other CalMac routes, Gourock-Dunoon was a route for which it was not reasonable to expect that suitable vessels could be available on the second hand market, for routes like Gourock-Dunoon, these would have to be built specially and to order.

Then in early 2003, the Executive announced that Gourock-Dunoon would be tendered separately from the main network tender and that tenderers would be required to bring their own boats. This was despite the fact that the Executive's own internal research and advice in the unpublished 2001 document was that officials knew there was little chance of suitable vessels being available on the open market, they would have to be designed and built from scratch. But because the 2001 document was not published the public did not know anything about this research and advice and did not know that Executive officials knew this process could not be expected to lead to suitable vessels being produced for Gourock-Dunoon.

Then later in 2003 the Commission produced their revised Guidelines for the tendering of ferry services in which it made clear that in certain "unique" circumstances it would be possible for a government to build vessels specially for individual routes and specify that these vessels be used by the winning bidder. The Executive would then have realised that the research summarised in the 2001 documents gave them the ammunition needed to argue that the main CalMac network could be kept together as one integrated network with vessels specially built and deployed for each route . So they published the 2001 document in 2005 to make that case for the main CalMac network. Either they or the Commission would have felt that such publication was necessary in order to demonstrate to other interested potential bidders why CalMac had to remain a single integrated network, with vessels built and supplied to order.

But what the Executive officials did not realise (or if they did, they kept quiet about it, which may explain why the document was not published or promoted widely) was that the case they had made for building suitable vessels for the main CalMac network was the same case they had made for building suitable vessels for the Gourock-Dunoon route. The only substantive difference in these respects between 2001 and 2005 was that Gourock-Dunoon was now to be tendered separately, but that contractual difference in no way affected the general argument that vessels would have to be built specially for the route since suitable vessels could not be expected to be available on the open market.

Which brings us to 2010-11 and the Government's claims that "suitable" vehicle-passenger ferries for Gourock-Dunoon were available on the open market if tenderers wished to use them (at which point we can hear the European Commission saying; "Oh really? If that is the case, perhaps we should review again the Executive's argument that suitable vehicle-passenger vessels are not available for the rest of the CalMac network and they have to be designed and built specially. Perhaps after all we should require the network to be split up, as we originally intended in 2001, to allow operators to bring in their own vessels more easily").

But there are no suitable vehicle-passenger vessels for Gourock-Dunoon. That was just some more DUNCS that was being fed cynically to the public, those responsible hoped that the public would believe it and the Commission would not hear it. Instead we are about to see the end degradation of this route and the result of systemic and sustained DUNCS over the years by those responsible. It will almost certainly lead to a monopoly of vehicle carrying by an unrestricted private operator and a highly subsidized and inefficient foot passenger service over one of the most strategically important parts of the transport network in the west coast. At the same time, the fact the false claims that "suitable" vessels are available here are encouraging cherry pickers and vested interests to lobby for the selective or total break up of the rest of the CalMac network. Whether all this was deliberate or due to negligence is not yet clear, but DUNCS is a polite word, there are worse ones that would be more appropriate.

The DUNCS are so bad and so well evidenced, the errors, actions, and inactions so egregious that there are clear and justified cases for two separate steps to be taken:

(1) There should be an independent Inquiry into the issue of Gourock-Dunoon with particular reference to the advice of officials in this capacity. Given that many of the problems had their gestation in the early Eighties, the Inquiry's scope should extend back at least as far as that period.

(2) There should be a judicial review of the present Gourock-Dunoon tender with an aim of establishing whether there is a case that the tender was predicated on false and misleading advice and information, and if so what action should be taken. This review should also take on board the arguments of the Executive document on the uniqueness of the CalMac fleet and the Executive's Deloitte Touche report into the Gourock-Dunoon ferries. These two official documents together make the case that two modern vehicle-passenger ferries should have been (and should still be) built specially for Gourock-Dunoon.

But what, if after all this (and against all the evidence), the new Scottish Government finishes up claiming after the Gourock-Dunoon tender results are announced that a "suitable" vessel (or "suitable" vessels) have indeed been produced for Gourock-Dunoon (even if passenger-only)? Then just watch the cherry pickers, their lobbyists and their PR reps lobby the Commission that this "proves" the CalMac network should be broken and operators be allowed to bring in their own "suitable" vessels to cherry pick where and when they wish. That is how big the stakes are here, not just for Gourock-Dunoon but for the whole Scottish ferry network.

Neil Kay 3rd May 2011